Sterling clings to three-year high vs euro

The big picture is that sterling is at its strongest level against the euro in three years, as fears of a disorderly Brexit next month are banished.

The pound is holding firm over €1.20 -- it’s not closed that high since June 2016.

Against the dollar, it’s holding steady at an 18-month high.

Emma Wall, head of investment analyst at Hargreaves Lansdown, says the size of Johnson’s win has surprised the City

“What a night! While the polls – and indeed the markets – were prepared for a Conservative win, it certainly wasn’t of this magnitude.

Adrian Lowcock, head of personal investing at Willis Owen, agrees:

“Investors are going to be relieved, and the pound has already rocketed on the back of the exit polls as fears of a hung parliament were removed.

In terms of markets today, a Conservative majority is likely to be well received as it unlocks the political process, gives some certainty over Brexit and removes the risks of the anti-business policies of the labour manifesto, such as nationalisation.

After #Conservative majority $GBP 'has solidified overnight gains as scale of Tory win becomes clear.. $GBPUSD hit an eighteen month high, while against the euro sterling is at its highest level in over three years. A positive open is expected for FTSE 100 too. pic.twitter.com/OUmjTbm2Cy

Donald Trump has tweeted that the US and UK are free to strike a “massive new trade deal”.

Donald J. Trump (@realDonaldTrump)

Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT. This deal has the potential to be far bigger and more lucrative than any deal that could be made with the E.U. Celebrate Boris!

But is Trump stirring things up here? The nub of the issue is that Britain may have to decide which system to align itself with -- the EU, or the US. This is the “chlorinated chicken issue” that could dominate the next stage of Brexit.

The US and China have reportedly reached “a deal in principle” to resolve a bruising 17-month trade war, as Beijing blamed Washington for “seriously damaging” ties between the two countries Friday.

Reports that the two sides had reached a limited deal emerged on Thursday evening but Beijing remained silent on the issue. At a previously scheduled symposium on Friday, China’s minister of foreign affairs, Wang Yi, said his country had pushed back against American “bullying”.

Wang said the US had “slandered” China by criticising Beijing over its policies in Hong Kong and Xinjiang, damaging “hard-won mutual trust”.

Earlier, Reuters reported that the two sides were still formulating a written agreement but an “agreement in principle” had been reached, according to a source familiar with the negotiations.